Regulatory spotlight: August 2018

Brexit, Payment Services and PRIIPs

· Regulatory update,Brexit,Payment services

Brexit

As we wave goodbye to the last of the heat wave and welcome the soggy days ahead, we certainly don’t expect to see the end of the ‘Brexit heat’ just yet. Despite the White Paper not providing any further clarity on the fate of financial services firms in a ‘post-Brexit world’, the FCA has reiterated that firms are expected to understand the implications of Brexit and plan accordingly.

For firms and funds based in the UK that conduct business in the EEA and firms based in the EEA that carry out certain types of business in the UK, the current passporting regime in the UK will no longer apply. The FCA has included questions for firms to consider which can help decide how they will conduct business or how Brexit will affect their business.

Firms are expected to consider:

changes they might have to make to their business including additional regulatory permissions they may need to conduct regulatory activities.

how clients will be affected by their plans and the best way to notify them of this in a way that is fair, clear and not misleading. An example of this could include a change in contractual terms.

the implications of a range of possible scenarios including an implementation period and how best to adequately prepare for these scenarios.

Payment Services revamp

If you’re a firm within the payment services and e-money sector, you will want to be familiar with the proposals made by the FCA in Consultation paper 18/21 to extend the range of rules to which PSIs and EMIs are subject.

You can find out more of the detail in our coverage of the changes but proposals include:

extending the application of certain specific rules about promotions and communications so that they cover wider categories of businesses that the FCA regulates;

extending the application of the FCA's Principles for Businesses to any provision of payment services and issuance of e-money.

introducing specific rules and guidance to ensure that these services are promoted and advertised in a way that is clear, fair and not misleading.

issuing guidance to help ensure that firms do not mislead consumers when they are advertising payment services that involve a currency conversion.

The FCA is seeking comments on the proposals by 1 November 2018.

PRIIPS feedback

The FCA is inviting firms and consumers to comment on their experience of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation.

Such a request, less than 9 months since implementation, suggests that the FCA has caught wind of the general criticism being levied at the Key Information Documents (KIDs).

Comments should be made by 28 September 2018.

The best of the rest

A collaboration between 11 financial regulators and regulated organisations, including the FCA, has been announced. The Global Financial Innovation Network (GFIN) seeks to provide a more efficient way for innovative firms to interact with regulators and create a new framework for co-operation between financial services regulators. The group has launched a consultation on the role the GFIN should play in delivering its objective and feedback is welcome until 14 October 2018. Click here for further information on how to respond.

The FCA is keeping up the heat on pension scams. It has issued fresh warnings for consumers, through TV, radio and online advertising, to be ScamSmart when dealing with authorised firms offering to change pension arrangements. With the Unauthorised Business Department commencing proceedings against 2 unregulated pension introducers involving the transfer of £86 million in pension assets from over 2000 consumers, the launch of this latest SmartScam campaign is timely, to say the least!

The system firms use to submit applications and notifications to the FCA, the Connect system, is to be revamped so that it is more intuitive to use so that firms can track the progress of their applications.

Any questions?

We are constantly keeping up-to-date with the regulatory changes within the financial services industry. If you need assistance to keep up with these regulatory changes please feel free to contact the team.